CATTLETSBURG, KY – JUNE 3: A tractor trailer drives by a mound of coal after delivering a truckload of coal to Arch Coal Terminals June 3, 2014 in Cattletsburg, Kentucky. New regulations on carbon emissions proposed by the Obama administration have reportedly angered politicians on both sides of the aisle in energy-producing states such as Kentucky and West Virginia. (Photo by Luke Sharrett/Getty Images) Published Credit: Luke Sharrett/Getty Images

Fitch said that level of default represented an “unprecedented peak” for the coal subsector.

Metals and mining debt represents only 5% of the total principal for all U.S. high-yield debt, the firm said, which could contain any spillover to the broader junk-debt market. The total default rate for the past 12 months stands at 3.4%, it said.

Coal miners have been “serial filers” for Chapter 11 protection, Fitch added, thanks to “unsustainably high debt leverage from past acquisitions followed by a plunge in coal pricing.”

Fitch pointed to the company’s debt-fueled acquisitions and stagnant demand and pricing, among other factors. Also, a distressed debt exchange failed when senior-secured lenders recently blocked the move because, they said, Arch was already in default.

Junior bondholders will receive “essentially” nothing based on market prices for Arch debt, while first-lien debt owners may get less than 50 cents on the dollar. Unsecured bondholders are likely to be “wiped out” in the restructuring.

A majority of lenders have agreed on a plan to eliminate more than $4.5 billion in debt and give Arch a $275 million debtor-in-possession loan. Arch, one of the largest coal producers in the U.S., also has more than $600 million in cash on hand.

Fitch said Arch plans to continue to pay suppliers, fund retiree benefits and pay for its employee health plans.

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